How Blockchain Will Impact​Travel and Tourism

7 min read

The proliferation of services in the travel and tourism industry has been both a boon and a curse. For instance, if you’re planning a trip, chances are that your flights, hotel reservations, ground transportation, entertainment and excursions will be purchased from different vendors who are largely disconnected, leading to a highly fragmented and time-consuming booking experience.

People have always had a strong desire to travel and explore the world. It was this urge that led us to spread across the Earth and now prompts us to reach beyond our planet into outer space. Throughout much of human history, however, travelling was a difficult and dangerous activity restricted to an adventurous few. But that has changed drastically in the last hundred years or so. The advent of modern transportation has allowed us to travel across the world safely in a matter of hours.

The rise of personal computing and the Internet has driven the growth of global travel and tourism, now a $7.6 trillion industry. Today, there are thousands of online travel agencies, allowing you to book a vacation anywhere in the world from the comfort of your phone or laptop. Despite this remarkable progress, the travel industry is still hampered by enormous efficiencies, as discussed below.

Organizations tend to hold data in silos

This results in lack of communication between different parties and service providers, and can cause various issues such as: lost luggage; flight delays; over-bookings; multiple tickets and multiple booking steps just to fly somewhere; missed connections; forgotten airport pickups; and myriad other inefficiencies and service failures.

At Ayurooms, we have to be constantly proactive about such service lapses and, therefore, we remain in continual touch with both our clients and partner resorts. On one side, we make sure that our clients’ needs and travel plans are understood; and on the other side, we makes sure our partner resorts know enough about clients and don’t drop the ball in serving them.

Payments and settlements continue to be challenging and time consuming

Because this is an industry traditionally built on an aggregation model, a complex payment ecosystem has sprung up around it. It is not always possible to pay for travel using the mode or currency that you prefer, or according to the timelines that suit you. Apart from adding cost to the end customer, it is challenging for a service provider, such as a travel agent, to ensure that payments are settled properly.

Imagine a world where we can pay for travel in any currency or cryptocurrency​

​At Ayurooms, we work on the premise that our clients should be able to pay in any currency of their choice and using any mode of payment. We are not 100% there, but our goal is clear: people should have the ability to pay for flights, healthcare and travel using cryptocurrencies or whatever mode or medium suits them.

Customer touch points are disconnected

The proliferation of services in the travel and tourism industry has been both a boon and a curse. For instance, if you’re planning a trip, chances are that your flights, hotel reservations, ground transportation, entertainment and excursions will be purchased from different vendors who are largely disconnected, leading to a highly fragmented and time-consuming booking experience. It is also highly problematic to change plans at the last minute because of so many different vendors being involved.

At Ayurooms, we strive to be a “one-stop shop” for our clients. Above and beyond arranging their stay and medical treatments at the best health resorts in India, we also help them with flights, visa, transit hotel, private yoga sessions, shopping, tailoring, tours, excursions and many other services. All of this requires extensive coordination and effort.

Enter Blockchain

Decentralized technologies like Blockchain are poised to solve the challenges and inefficiencies described above and disrupt not just the travel industry, but also most industries in the world. Solutions built around them tend to be cheaper and more secure than their centralized counterparts. But first let us understand what Blockchain actually is.

Blockchain is the underlying technology behind Bitcoin and most of the other cryptocurrencies out there. Although there’s a lot of mathematics and cryptography involved, the basic concept is not difficult to understand.

At its core, a blockchain is simply a distributed record keeping system. For example, in the case of Bitcoin, instead of having a trusted third party such as a bank keep a record of how much money each person has in his account, every person in the network stores these data. Whenever a new transaction takes place, it can only be added to the distributed database if enough people on the network agree that it is a valid transaction.

Benefits of Blockchain

Blockchain technology excels in situations where multiple entities who don’t necessarily know or trust each other need to conduct business with one another without the need for a third party mediator. Some of the major benefits of using blockchain technology are:​

Interoperability – It allows for fast and agile integration between disparate systems, while allowing shared simultaneous access to the same version of data across multiple players.

Immutability – It prevents the modification of data, which have been entered once, thus assuring the integrity and authenticity of the stored data.​

There are multiple ways in which such a system can impact the travel and tourism industry. Let’s take a look at some of the more impactful ones.

Lost luggage costs airlines over $2 billion per year

​Real-time baggage tracking

One of the areas that Blockchain is having a huge global impact is in supply chain and logistics. Imagine if the same solution could be extended to the problem of tracking luggage in the travel industry. Loss of luggage costs airlines upwards of $2 billion a year. Having a blockchain-based solution, which would allow pinpoint tracking of luggage and increase transparency for all parties, would certainly improve the situation.

Optimizing customer loyalty programs

While a lot of players in the industry offer loyalty programs, they rarely interoperate with each other. Imagine if you could use your domestic frequent flyer miles in the US to get a discount at a resort in India. This is exactly the sort of product that companies like Sandblock are building using blockchain technology, which promises to transform the loyalty programme experience for both businesses and customers. A global blockchain-based loyalty system could also potentially include options to transfer tokens to friends or convert them to crypto currencies.

Improving identity management

Companies like Civic have developed blockchain-based identity management systems, which secure your online identity in a tamper-proof manner. Such systems can improve the ease and reliability of customs security handling at international borders, thus help both security professionals as well as travellers. It will also enable travel players to provide personalized offerings to their customers.

Can you imagine a day when phone becomes your passport?

Secure, traceable payments

This is perhaps the most important use case of blockchain in the travel and tourism industry. The massive volume of transactions in the travel industry leads to data discrepancies and billions of dollars of lost revenue. Having a global shared distributed ledger will reduce the reconciliation time for each transaction significantly. Platforms like Winding Tree are working towards such a decentralized travel ecosystem, which would also allow travel companies to start accepting payment in cryptocurrencies.

​While the potential benefits of blockchain technology are widely acknowledged, there are several issues that need to be resolved before there is a clear path to widespread adoption.

Speed and scalability

Popular blockchain platforms like Ethereum can currently only handle around 15 transactions per second whereas traditional networks like VISA can handle upwards of 45,000 transactions per second. This number definitely needs to go up to facilitate widespread adoption of blockchain technology.

Compatibility with existing systems

This is a major challenge faced by most blockchain-based platforms in every industry. Legacy systems cannot be replaced overnight, so newer systems have to be built in such a way that they are interoperable with them.

Public education about security implications

Unlike centralized systems, there is no way to recover your data or money if the passwords to your decentralized accounts are lost or stolen. Experiencing such a situation would almost surely prompt a user to never to return to the technology again. So it is up to the platform and service providers to educate users about adequate security precautions.

Regulatory buy-in

​The real power of blockchain technology is in effecting ‘smart contracts’ which allow two or more parties to enter into agreements without needing a third party such as a lawyer. But until they are accepted as legal contracts in a court of law, the benefits they offer will be severely curtailed. Similarly, legal acceptance of blockchain records for financial auditing purposes is also needed for widespread adoption of the technology.

Travel companies will soon be able to accept payment in cryptocurrencies

Where we are now

​While a lot of effort is going into solving the above issues, it will definitely take a few years before the technology is mature enough to give confidence to business owners and governments that it is ready for mass deployment. Blockchain technology right now is at a similar stage as the Internet was in the early 90s.

As the space evolves and matures, we can expect to see truly decentralized companies and organizations emerging not just in the travel and tourism industry, but also most other industries. Who knows what the Facebooks and AirBnBs of the blockchain world would look like in the future. It’s definitely an exciting developing technology that may help us to travel more efficiently and make the world a better place.

This article was written by independent writer and blockchain enthusiast, Advaith Mohan, and edited by Alykhan Alidina, Chief Experience Officer at Ayurooms and a curator of personalized Ayurveda and yoga retreats in India.